Investing with Faith / Kimberly Pohovey

How qualified charitable distributions benefit donors and recipients

Let’s say you just turned 72—Happy Birthday! You know that you are now required to begin withdrawing funds from your individual retirement account (IRA), or face a stiff financial penalty if you don’t. You’re not planning to take out more than the minimum, and you won’t need the whole amount as income. So, you’ve decided to share your blessings with others and keep giving—as you have for years—to your parish, the United Catholic Appeal, and the local Catholic Charities homeless shelter. Great!

But before you get out your wallet or checkbook, there’s an alternative way to give that’s worth considering. That’s because a qualified charitable distribution (QCD) from your IRA might benefit you as well as the good works that are close to your heart.

What is a QCD?

Through a qualified charitable distribution, you can make your gift directly from your IRA. Your donation can be annual or one time, and you can designate one or several recipients. All you need to do is direct your IRA custodian to make a gift to a qualified charity. No new accounts. No complicated paperwork. No fees. It’s simple!

So what’s the advantage?

Thanks for asking! There are two key advantages to giving through a QCD.

• First, the amount you give is counted as part of your annual required minimum distribution. As some people have observed, “I have to take the money out one way or another.” A QCD helps you meet that obligation and avoid penalties. In the meantime, you’re able to support the efforts that make a difference for so many.

• Second, the amount you give through a QCD is not counted as taxable income. Because you are making a direct gift to charity, these funds are tax free and not reported as income. For some, giving through a QCD could lower the Social Security benefit tax and/or the Medicare premium rate, but check with your tax advisor on your specific tax advantages.

That’s why QCDs are becoming a more and more popular way to support the agencies and institutions that do good where it’s needed most—through non-profits like Catholic Charities, your local parish and the Catholic school your grandchildren attend.

But there are even more reasons to consider a QCD. You may have noticed that the recent increase in the standard deduction means many individuals can no longer benefit from itemizing charitable gifts. A QCD still provides you a way to give with tax benefits. And if you’re already planning to tithe or donate, QCDs offer a way to give more to the recipients you’ve chosen. That’s because what you give is tax free, and 100% of the amount you choose will go to the qualified charitable endeavors you choose. In other words, a QCD means that you’ll be giving less to the government, and more to those in need!

Our staff at the archdiocese Office of Stewardship and Development is here to help you consider whether a QCD is right for you. We process these kinds of gifts every day and know how to work with brokers and IRA custodians to pin down all the details. And we’re here to ensure that your much-appreciated financial gift is directed precisely as you desire. We want to be a resource to you and invite you to contact us with any questions you might have about how giving through a qualified charitable distribution can benefit you as well as the good works that are close to your heart.
 

(Kimberly Pohovey is the director of major and planned gifts for the archdiocese. Tax or legal information provided herein is not intended as tax or legal advice. Always consult with your legal, tax or financial advisors before implementing any gift plan. For more information on the CCF, visit www.archindy.org/CCF, e-mail ccf@archindy.org, or call 317-236-1482.) †